United States District Court, D. Minnesota
LOUIS DEGIDIO, INC., LOUIS DEGIDIO SERVICES, INC., JAMES DEGIDIO, and MICHAEL DEGIDIO Plaintiffs,
INDUSTRIAL COMBUSTION, LLC, and CLEAVER-BROOKS, INC., Defendants.
R. Walsten and David A. Brandis, for plaintiffs.
Maher, for defendants.
MEMORANDUM OPINION AND ORDER ON PLAINTIFF'S
MOTION FOR PRELIMINARY INJUNCTION
R. TUNHEIM CHIEF JUDGE
Louis DeGidio, Inc.; Louis DeGidio Services, Inc.; James
DeGidio; and Michael DeGidio (collectively,
“DeGidio”) brought suit against Defendants
Industrial Combustion, Inc., and Cleaver-Brooks, Inc.,
(collectively, “IC”) based on IC's
termination of a 60-year business relationship between
DeGidio and IC. DeGidio brought claims for breach of
contract, fraud/misrepresentation, negligent
misrepresentation, estoppel, tortious interference, and
unjust enrichment. DeGidio claims that because it is a
franchisee, it is entitled to the protections of the
Minnesota Franchise Act. DeGidio has moved for a Preliminary
Injunction, requesting that the Court enjoin IC from
terminating the business relationship. The Court will deny
DeGidio is a distributor for IC,
which manufacturers burners that are used in boilers. (Am.
Compl. (“FAC”) ¶ 9, Dec. 2, 2019, Docket No.
40.) The parties and their predecessors-in-interest have had
a business relationship for approximately 60 years.
(Id. ¶ 4.) The parties' relationship has
been governed by a series of agreements. The most recent
written agreement is from 2007. (Id., Ex. B
(“2007 Agreement”) at 5, Dec. 2, 2019, Docket No.
THE 2007 AGREEMENT
relevant to this dispute, the 2007 Agreement contains the
Term: “The Term of this Agreement shall be for
three years, beginning on the 15th of November,
2007, unless terminated as provided for herein.” (2007
Agreement ¶ 2.)
Merger: “This Agreement represents the entire
agreement between IC and Louis DeGidio Inc., the
Representative, and all previous agreements (if any) are
hereby terminated. No change, alteration or amendment of this
Agreement shall be valid unless in written form, and executed
by both parties.” (Id. ¶ 18.)
Minimum stock: The Agreement requires DeGidio to
maintain “minimum stock at its place of business for
efficient sale, service and repair of I.C. products.
(Id. ¶ 4)
Termination: “This Agreement may be terminated
or cancelled by either party without cause with sixty-day
written notice. The notice must be sent by Certified U.S.
Mail by one party to the other, at their currently known
address, and shall include the exact date of
termination.” (Id. ¶ 16.)
Training: “I.C. will assist in the training of
the sales and service personnel of the Representative.
Training shall be limited to the operation and application of
I.C. products, or other training, which from time to time,
may be deemed as necessary by I.C. and within related phases
of the industry.” (Id. ¶ 5.)
2007 Agreement does not use the term franchise and does not
reference any franchise fee. IC has not filed any franchise
paperwork with the State of Minnesota. (Aff. of David Brandis
¶ 3, Oct. 11, 2019, Docket No. 9.)
PARTIES' CONTINUED RELATIONSHIP POST-2010
the 2007 Agreement expired by its own terms in 2010, the
parties continued their distribution relationship until 2019.
In May 2019, IC reached out to DeGidio to discuss sales
targets, and sent DeGidio a sales target letter proposing
that DeGidio aim for $100, 000 in sales for fiscal year 2020.
(Decl. of Kevin Pheney (“Pheney Decl.”)
¶¶ 20-21, Nov. 1, 2019, Docket No. 27.) After
several attempts to meet in person, the parties eventually
met to discuss plans on August 15, 2019. (Id.
¶¶ 25-26.) During the meeting DeGidio declined to
increase its territory to the entire state of Minnesota but
agreed to the proposed sales target. (Id.
¶¶ 27-28.) However, by September 3, 2019, DeGidio
had not returned the signed sales target letter, despite
IC's repeated requests. (Id. ¶¶ 30,
32.) That day, IC gave DeGidio 30 days' notice of
termination. (Id. ¶ 33.)
filed its initial Complaint, seeking declaratory judgment and
bringing claims for breach of contract,
fraud/misrepresentation, negligent misrepresentation,
estoppel, tortious interference, and unjust enrichment on
October 10, 2019. (Compl. at 13-25, Docket No. 1.) DeGidio
filed its Motion for a Preliminary Injunction on October 11,
2019. (Docket No. 6.) On October 17, 2019, IC withdrew its
initial September 3, 2019 notice, and instead issued a new
60-day notice of termination, effective that day. (Pheney
Decl. ¶ 34.) On December 2, 2019, while this Motion was
pending, DeGidio filed an Amended Complaint, adding
Cleaver-Brooks, Inc., as a defendant, and adding two
additional claims for violations of the Minnesota Franchise
Act and for Controlling Person Liability. (FAC at 1, 26-27.)
DeGideo is now seeking to enjoin IC from terminating its
business relationship with DeGideo while this litigation
a preliminary injunction should issue turns upon: (1) the
probability of the movant succeeding on the merits; (2) the
threat of irreparable harm to the movant; (3) the balance
between this harm and the injury the injunction will inflict
on the non-movant; and (4) the public interest. Dataphase
Sys. Inc. v. CL Sys., Inc., 640 F.2d 109, 113
(8th Cir. 1981) (en banc). For a preliminary
injunction, the “question is whether the balance of
equities so favors the movant that justice requires the court
to intervene to preserve the status quo until the merits are
determined.” Id. “It frequently is
observed that a preliminary injunction is an extraordinary
and drastic remedy, one that should not be granted unless the